20 April 2019
All three mainland carriers are actively pursuing Narrowband IoT which could become commercially viable in three years. Photo:
All three mainland carriers are actively pursuing Narrowband IoT which could become commercially viable in three years. Photo:

Narrowband IoT: New hope for China’s telecom giants

Some Chinese customers still have to pay roaming charges when they make calls to another province or city in the mainland.

Premier Li Keqiang announced during the Two Sessions that such charges will be removed from Oct. 1.

The news has weighed on the share prices of the nation’s three telecom giants. Yet the actual impact of the new policy is limited.

The government has previously pressured the telecom industry to gradually reduce or eliminate domestic roaming fees, and the sector has heeded the call, partly because operators believe lower costs could stimulate usage and attract more customers.

In China Unicom (00762.HK, 600050.CN), for instance, only 4 percent of the customers pay domestic roaming charges in their contracts, according to the group’s chairman Wang Xiaochu.

As such, the fee waiver will have limited impact on the revenue of the three big carriers.

On the other hand, a recent proposal by Tencent (00700.HK) founder Ma Huateng could spell new business opportunities for carriers.

Ma said it’s time for China to pursue the adoption and commercialization of Narrowband IoT (Internet of Things).

Narrowband IoT is a new technology standard that has been developed to enable a wide range of devices and services to be connected using cellular telecommunications bands.

The technology focuses on indoor coverage, and has the merits of low cost and long battery life while enabling a large number of devices to be connected.

As such, unlike broadband, narrowband technology is more suitable for developing the Internet of Things.

“In the future, chips for Narrowband IoT are going to become really cheap, like several yuan each,” Ma said.

“One could easily afford several dozens or even a hundred, and the service fee would be low. Users can use them for all sorts of home appliances.”

If WeChat has facilitated interpersonal communications, Narrowband IoT will do the job for communication between people and things, as well as between different things, he said, adding that Tencent is betting heavily on this emerging technology.

“We are making a lot of trials on our own social network platforms, such as WeChat and QQ, and hopefully we can find some interaction models with smart home appliances,” Ma said.

Chinese internet giants Alibaba and Baidu as well as global titans like Google and Facebook also view IoT as a key business in the future.

Currently, China’s three telecom giants are all developing narrowband chip technologies.

In October last year, China Mobile (00941.HK) completed preliminary testing of narrowband IoT technology together with telecom equipment maker Huawei Technologies.

China Unicom unveiled a smart parking technology, enabled by narrowband IoT, in June last year.

China Telecom ( 00728.HK) revealed in January that it has built up 297 base stations in 12 Chinese cities in a pilot program.

China is at the forefront line of narrowband IoT development worldwide, and it’s likely to become the first nation to commercialize the technology.

It’s estimated that commercialization of the technology could happen in three years.

This article appeared in the Hong Kong Economic Journal on March 7

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist

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